Ending Fixed Term Contracts: Is a typical severance package sufficient

| October 2nd, 2017 | No Comments »

In the case of Howard v. Benson (2016), the Ontario Court of Appeals cleared up any uncertainty regarding employers ending fixed-term employment contracts prematurely. In the case, the court ruled that fixed-term employment contracts require employers to pay the employee the reminder of what would have been earned had the contract not been ended prematurely. In other words, a typical severance package or notice is not sufficient. There is an exception, however. For fixed term contracts that contain a termination clause, the provisions of the clause would apply given it complies with minimal standards legislation.

Given recent developments, employers are held to rigorous standards when drafting such clauses as any uncertainties in language may render the clause invalid. This makes it imperative for employers to seek legal assistance when implementing termination clauses within fixed-term employment contracts. In the event the clause is found unenforceable, the balance of the contract would be owed to the employee.

Employers should also be aware that an employee’s duty to mitigate damages does not apply when the employer decides to prematurely end a fixed term contract without a termination clause. Normally, if an employee does not mitigate damages by searching for comparable employment during the notice period, the courts will award less in damages to the employee.  But in the case of fixed-term contracts, employers will owe the remaining balance of the contract regardless of the employee’s efforts to mitigate damages. This makes it all more important for employers to implement a termination clause. Always seek the assistance of an employment lawyer when implementing termination clauses within fixed-term contracts to ensure the clause is enforceable if challenged.

Terminated without notice: are discretionary bonuses part of the severance package?

| August 15th, 2017 | No Comments »

Bonuses may make up a significant portion of pay for executives, senior managers, and other high skilled employees. Upon termination of the employment relation, notice or pay in lieu is meant to place an individual in a similar place had they not been terminated. Pay in lieu is refereed to as ‘notice pay’. Notice pay is how the courts determine the amount of pay in damages that an employee that was denied reasonable notice is owed. Consistent with this principle, discretionary bonuses may need to be included in an employee’s a severance when choosing no to give notice of termination.

Discretionary Bonuses

A discretionary bonus, by definition, is awarded at the employer’s will without objective criteria. When included in an employment contract, discretionary bonus will clearly specify that the bonus is solely to the determination of the employer and may or may not be granted. Employers often will argue that since the bonus is discretionary, it should not have to be included in notice pay. However, there are scenarios where discretionary bonuses will be included as damages by the courts when assessing the amount of notice pay the employee is owed.

Discretionary Bonuses and Notice Pay

When the employee has been with the employer for many years and the bonus was paid regularly, it is likely to be included in the notice pay, especially if it composed a significant portion of the employee’s total compensation. The less often and regular the bonus was paid, the greater the chance the bonus will not be included in the notice pay. Further, courts have also determined that if current employees of a similar position and status receive a discretionary bonus, the terminated employee must also receive the payment of the discretionary bonus in their notice pay.

Final Remarks

Overall, it is important for the discretionary bonus clause to be unambiguous because any difficulty in interpretation will fall in the employee’s favour. In addition, where the bonus is labeled as discretionary in the employment contract, but in practice is subjected to objective criteria, the courts will not view this as discretionary. When dealing with executive type compensation, properly drafted contracts and practices are very important. What was initially thought to be an agreed upon contact may end up being very costly for an employer. it is advisable to seek legal expertise when drafting contracts that seek to define the limits of severance payment with regards to discretionary bonuses.

Constructive Dismissal in Ontario: What Qualifies and Do You Have A Case?

| December 16th, 2015 | 1 Comment »

Constructive dismissalVery simply, a constructive dismissal is when an employer makes fundamental changes to an employee’s job that are unfavourable to the employee. The employee may resign and demand a severance package as though the employer terminated the employment relationship.   Examples of constructive dismissal may include:

  • a demotion
  • pay cut
  • change in work location
  • change in schedule
  • change in job duties
  • intolerable conditions in the workplace, such as harassment, discrimination or toxic work environment

A constructive dismissal may not necessarily be a single fundamental change, but a series of incremental changes that on the whole, represent a substantial change to the employment relationship.

Workplaces are not static. Change is inevitable and it is not uncommon for employees to dislike certain changes to their job. However, not all changes will amount to a constructive dismissal. For example, a change in job location that may entail an extra half hour of commuting time, while inconvenient, probably would not amount to a constructive dismissal. Conversely, a change in location that may add several hours of additional commuting time is more likely to amount to a constructive dismissal.

In order to have a valid claim for a severance package from your employer, the change has to be a substantial departure from the existing employment relationship, and it would be unreasonable in the circumstances to continue working. It is important that you obtain legal advice about whether you have a claim for a severance package before you consider leaving your job.

Author: Jonquille Pak, Whitten & Lublin

Will you be getting severance or not?

| August 2nd, 2013 | No Comments »

When are employees entitled to severance and when are they not? This is one of the most common questions employees would like answered. In his latest video interview in the Globe and Mail, Daniel Lublin, Employment Lawyer has explained that if the employer wants to terminate an employee, it is in their discretion to do so.


“With Cause” or “Without Cause”?

Employers, when terminating an employee, must elect whether to end the relationship “with cause” (i.e., misconduct) or “without cause” (e.g. downsizing, restructuring, etc.) Mr. Lublin explains that when it comes to misconduct, the employee will not be entitled to any severance. The law in Ontario, and often the clauses of employment contracts, stipulates that misconduct in the workplace is ground for termination without severance. However, when terminated “without cause”, the employee is entitled to notice of termination or pay in lieu of that notice. This can be confusing to employers and employee alike, and there is always a “but”—which is why it is best to consult an expert who will help you determine what your entitlements are.


When will you not be getting severance?

As above, you will not get severance if you are terminated as the result of misconduct or serious misconduct. As opposed to misconduct alone, which entail poor performance or change in opinion of the employee generally, serious misconduct refers to specific actions such as theft, dishonesty, etc. Further, you will not get severance if you resign, no matter the length or merit of your service.

To know if you will be getting severance or not, consult an employment lawyer today.


My ex-employer refused to pay my severance! Can he do that?

| March 25th, 2013 | No Comments »

Being laid off does not make it any easier for an employee to realize what his/her rights are or what next steps should be taken. Many employees believe severance packages are non-negotiable and that after their dismissal they are only entitled to what the employer offers. This amount is usually no more than their statutory right to severance, found in employment standards legislation; so they sign whatever they are given.


Should you simply sign whatever has been offered?

Often, employers offer what they believe employees will accept, not what they are actually entitled to, because they know that statistically most employees will be happy to get anything at all. So, it is always wise to ask for more!

Then again, can the employer then change their mind about their offer and refuse to pay, when an employee asks for more?  Toronto Employment Lawyer, Daniel Lublin has recently answered a similar question in his Globe and Mail article Can my ex-employer refuse to pay severance?


Advice on employers refusing severance

He says if your employer refused to pay your severance, it makes your case against them even stronger.

Mr. Lublin explains that when you are laid off without cause, employment standards legislation states that you are automatically entitled to a statutory severance payment based on your tenure.  This is not something that can be taken away, and it is not negotiable. Even if negotiations are cut off, these payments must still be made, and they must be made immediately following your termination.

When it comes to long serving employees, the statutory amounts should never be overlooked and employers are required to provide a more generous severance package than what is required by employment standards legislation.


Will the courts help if your employer refused to pay severance?

Courts usually have sympathy when it comes to long-term employees, especially if the employer is not playing by the rules.  In any case, the only way you might end up with nothing at all is if you let your ex-employer take advantage of you.

If you have been terminated and want to know if your offer is fair, the best decision you can make is to contact an employment lawyer who can explain and guide you through your negotiation process, making sure that your entitlements are maximized.


Signing a contract after your new job has already begun

| June 21st, 2012 | No Comments »

How do you deal with a situation wherein an employee is told to sign a contract after his or her job has already started?  Can this contract be challenged without the risk of one loosing their new job?

In his latest article in the Metro, Toronto Employment Lawyer, Daniel Lublin explains a scenario in which an employment contract can be challenged after a termination.

Employees in Canada are entitled to fair severance payments upon their termination, unless there is a contract that specifies some other amount.  For that contract to be enforceable, employees must first voluntarily agree to the contract, otherwise it may be set aside.  When an employee is given a contract after he or she starts a new job, the contract must provide them with something of additional value in exchange for signing the contract.

Anthony Fasullo experienced this situation on his third day of work with Investments Hardware Ltd., when he was asked to sign an employment contract, without previously being informed of a  substantial limitation on any additional severance upon a termination.  Considering that he had resigned from his previous job just few days prior to that in order to accept this new position, he was left with no choice but to sign this new contract.

A few years later, Fasullo was fired and Investments Hardware Ltd., sought to enforce that contract in order to pay him a small amount of severance.  Recently, a judge struck down the contract and awarded Fasullo damages for wrongful dismissal.

More on employment contracts can be found here and the full article written by Daniel Lublin, Toronto Employment Lawyer, can be found here.


Court Upholds Magna’s Billion Dollar Decision

| August 26th, 2010 | No Comments »

Is an uninformed shareholder vote enough to sustain a decision that will affect all of Ontario? Frank Stronach and his board of directors seem to think so.

A recent ruling by the Ontario Superior Court was published by Jeff Gray and Greg Keenan on the Globe and Mail website.  The ruling effectively ended the dual-class share structure for Magna and bestowed nearly a billion dollars to the Stronach family. 

Dual class share structures (offering separate shares for simple, multiple, and non-voting rights) have been under scrutiny, and are often accused of deterring investors because of the control it gives to business owners.  The concern of Magna’s shareholders has been the 66% controlling interest that the Stronach family has had, despite owning less than 1% of the equity.  Pension fund lawyers argued in court that the judge was required to look beyond the positive shareholder vote.  Issues of concern were a lack of information provided by Magna executives to shareholders, as well as possible negative repercussions the decision could have on capital markets.

Although an eighteen-hundred percent premium can turn some heads, executive compensation has always been astonishing. 

Putting aside the media hype, it is worth noting the following:

  • The publicity garnered by this case will influence shareholder sensitivity in future corporate buyouts.  Be mindful of the attention you may attract by providing too little information to shareholders.  This could result in stakeholders questioning the fiduciary obligation of your board of directors, as it did in this case. 
  • Shareholders should carefully weigh the pros and cons of paying an exorbitant price for a buyout.  Ensure that you have access to the information needed to make an educated decision on the value gained; try not to make an emotionally-charged decision based on a mentality of “them” vs. “us”.

‘Cascade of excuses’ for unreasonable firing

| June 30th, 2010 | No Comments »

Janet Williamson, a health care worker at a retirement home in Mitchell, Ontario, was summoned to a meeting and told that if she took her vacation as planned, she would lose her job.

Williamson had agreed to join an 87-year-old resident on a Mediterranean cruise when the resident’s partner cancelled the last minute before their trip. Williamson received approval for the time off and agreed to step in.

However, a few days before the cruise, Williamson was called to a meeting with a newly-appointed CEO and told that her plans were a violation of her employer’s policy on accepting gifts from residents and given an ultimatum: If she went on the trip, she would be fired.

In my Metro news article from this week, I discuss the case in further detail.

Daniel A. Lublin is an employment lawyer with Whitten & Lublin LLP, which provides practical legal advice and advocacy for workplace issues.

Case of mistaken retirement

| November 22nd, 2007 | No Comments »

How do you beat your ex-employer in court but ultimately collect little or no damages? Ask Leo Magnan.

Magnan succeeded in proving that he was wrongfully dismissed but failed to collect the true value of his claim. His mistake: he couldn’t demonstrate that his dismissal caused him financial loss.

Magnan was a 65 year old customer support advisor with Brandt Tractor Ltd for 38 years, who had no intention to retire when his employer forced him to do just that. Brandt mistakenly believed that Alberta Human Rights legislation permitted it to enforce mandatory retirement for employees at 65.

Brandt reconsidered after a letter from Magnan’s lawyer. They offered Magnan a different job with the company because Brandt had already filled his position.  Instead of accepting the new position, Magnan sued Brandt, claiming its actions in mistakenly retiring him were tantamount to his dismissal and it was unreasonable to expect him to return, especially because the retirement was against his will. Although contrary to his claim, Magnan had accepted a valuable retirement gift just days prior to his lawyer’s letter.

An Alberta court agreed with Magnan’s claim however, in calculating the winnings, the court almost entirely reduced his claim. It found that Magnan could have avoided the loss he suffered. That is, the court found that as Magnan was going to retire even had he not been dismissed, the dismissal cause him few actual losses. The decision also indicated that Magnan couldn’t properly show he had looked for another job following his dismissal thus, significantly reducing his claim.

Employment law files can be won or lost where one side or the other doesn’t appreciate how an employee’s post-dismissal actions can affect the value of his or her claim. Employees can avoid this result by observing the following advice:

Make real efforts to find other work following dismissal to avoid as much economic loss as possible. Courts frown on employees who take little or no action to find other work and then sue their former employers for their salaries during that time.

To avoid an argument that other work was available had an employee simply looked, I advise my clients to apply for at least one or two jobs per week.

Keep detailed notes, documenting all efforts undertaken to look for other work and ensure that there are no documentary gaps.

Older employees in provinces without mandatory retirement should be cautious about mentioning planned retirement dates, especially if they suspect the company is planning to end the relationship.

You can read the article in full here.

Daniel A. Lublin is a Toronto Employment Lawyer.  He can be reached at dan@toronto-employmentlawyer.com or through his Website www.toronto-employmentlawyer.com.